Takata Reaches Settlement With States Over Airbags

The Japanese airbag maker Takata has reached a $650 million deal to settle consumer protection claims from 44 states and Washington, D.C., but only a tiny fraction of the money will be paid because of Takata’s financial problems and bankruptcy.

In an agreement announced Thursday, the states said they would not collect the settlement so that victims of Takata’s faulty airbag inflaters could get a bigger piece of the company’s remaining money. There’s an exception, though. South Carolina, which led the states, will get just over $139,000 to cover costs of the investigation.

Takata airbag inflaters can explode with too much force and spew shrapnel into drivers and passengers. At least 22 people have died worldwide, and more than 180 have been hurt.

Attorneys general for the states claimed that Takata had concealed airbag safety issues and failed to disclose safety defects.

Takata was forced into bankruptcy last year amid lawsuits, multimillion-dollar fines and crushing recall costs involving airbag inflaters that use the explosive chemical ammonium nitrate as a propellant. The chemical can deteriorate over time when exposed to high heat and humidity and burn too fast, blowing apart a metal canister. A reorganization plan for the company was approved last week by a federal bankruptcy judge in Delaware.

“We were able to resolve this investigation while ensuring that the needs of injured consumers take priority,” South Carolina’s attorney general, Alan Wilson, said in a statement.

Also under the deal, Takata agreed not to represent its airbags as being safe unless supported by scientific evidence, not to falsify any testing data and to keep cooperating with automakers to make sure replacement inflaters are available. It also will not sell any airbags that use ammonium nitrate unless for recall replacement parts. Some of the provisions were already included in an agreement with the National Highway Traffic Safety Administration.

A Takata spokesman was not immediately available for comment.

As part of a criminal plea agreement with the Justice Department, Takata agreed to pay $125 million to victims and $850 million in restitution to automakers who bought its inflaters and were stuck with recall and litigation costs. Under the restructuring plan, Takata will sell most of its assets unrelated to airbags to a Chinese-owned rival for $1.6 billion.

The problem touched off the largest automotive recall in United States history. Up to 69 million inflaters in the United States and an additional 60 million worldwide are being recalled, according to court documents and the National Highway Traffic Safety Administration.

Content originally published on https://www.nytimes.com/2018/02/22/business/takata-airbags-settlement.html by ASSOCIATED PRESS